The price of oil rose in trading on Wednesday from its lowest point in four months, as traders attempted to ascertain the price’s bottom floor following several days of declines.
Upon settlement, West Texas Intermediate (WIT) reached levels of $74 per barrel, a more than 1% increase from the previous five consecutive days of losses. This occurred subsequent to the market’s entry into the oversold region as a consequence of the OPEC+ initiative to increase supply beginning in October.
The US Energy Information Administration reported that crude inventories increased by 1.23 million barrels, which resulted in a decline in prices earlier in the session.
Despite concerns regarding demand and increased production from outside the group, the OPEC+ alliance decided on Sunday to commence reducing supply limits in the fourth quarter of this year, resulting in an approximately 4% decline in oil prices this week. Traders who depend on trend-following algorithms exacerbated the selling operations.
The cost of oil
WTI CRUDE • $74.07 +0.82 +1.12%
Brent Crude • $78.58 +1.06 +1.37%
CRUDE CITY • $78.95 +0.89 +1.14%
NATURAL GAS • $2.757 + 0.171 + 6.61%
LOUISIANA LIGHT • $81.51 -1.33 -1.61%
BONNY LIGHT • $76.54 -0.95 -1.23%
OPEC BASKET • $78.17 -3.13 -3.85%
MARS US • $76.83 -1.47 -1.88%
GASOLINE • $2.354 + 0.004 + 0.17%
RBC Capital Markets anticipates that the Saudi-led group will “re-press the cut button” if market weakness persists due to surplus, despite the fact that the Organization of the Petroleum Exporting Countries and its allies may have panicked the market with their decision. Although the majority of analysts anticipated that OPEC+ would extend the restrictions until the end of the year.
The alliance is already suggesting that there are concerns regarding consumption. Saudi Aramco, the largest producer in the alliance of producing countries, has reduced crude prices to Asia for the upcoming month due to uncertainty regarding the strength of demand.